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Financial Accounting vs. Managerial Accounting

Why not trust your taxes to your accountant?

Why not completely trust your taxes to your accountant? Because your accountant's interest in your taxes is different than yours.

This doesn't make them a bad accountant, or incapable of doing your taxes, but it is a reality often not considered.   

Your interest in your taxes is meeting governmental requirements at the lowest possible cost so you can serve your patients better and create family wealth.

Your accountant's interest in your taxes is to generate income and not get into trouble or get sued, so accountants are always balancing how much they can explain and justify to you in charges in relationship to keeping you as a customer.

Imagine your accountant's business. He or she probably has two to 5 staff accountants or bookkeepers to feed, office overhead, educational expenses, etc. Therefore they need to generate thousands of dollars a day in fee income. This doesn't leave much time for individual attention to any one small client.

It is important to realize even a relatively large Audiology Practice will always be a relatively small part of any Accountant's tax business. In most cases today your return is prepared by someone in your accountant's office electronically uploading your data, a QuickBooks file probably, into a program and clicking on prepare. Often there is no complete review, just clearing up an exception report of things that "look funny" which is typically performed by a staff bookkeeper.

Like in your practice the patient who comes in every 2 years for an evaluation and pays you for it is a valuable customer; but not one that you really have the time to know everything about their health care situation.

Things to remember:

  1. You are keeping your tax records. If you don't have a system to keep good records your accountant will prepare your returns with the wrong data and won't even know it.
  2. Your accountant does a lot of things other than taxes. They need to be busy year round, not just at tax time. They fill their time with helping larger businesses manage loans, performing audits, managing all kinds of other form and compliance issues. Many also like to consult. Often these are their main focus of year round business that feeds their families. Small business taxes are just the frosting on their cake as you need them done and as an unknowledgeable client often they can generate lots of fees for something that takes very little actual effort.
  3. Your accountant is not an expert in your field. Audiology practices are very different than most any other business. You combine durable medical goods with significant fee income which makes you different than other medical practices. Insurance billing issues with private pay. Your hearing aid returns and regulatory issues are very different than other typical professional organizations. When have you ever heard of an ENT being required to give patients money back because the patient didn't "like" the outcome?

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